Rogeline R.

Magno
Block A

MANILA ELECTRIC COMPANY V. SECRETARY OF LABOR

G.R. No. 127598
January 27,1999

Facts:

MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On
September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions
of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two
years starting from December 1, 1995 to November 30, 1997. MERALCO signified its willingness to re-
negotiate through its letter dated October 17, 1995 and formed a CBA negotiating panel for the purpose.
On November 10, 1995, MEWA submitted its proposal to MERALCO, which, in turn, presented a counter-
proposal. Thereafter, collective bargaining negotiations proceeded. However, despite the series of
meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at “terms
and conditions acceptable to both of them.”
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National
Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was
docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices.
The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable
settlement. MERALCO filed a petition to let the Secretary of DOLE to assume jurisdiction over the case
which was granted.

Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being negotiated in the
CBA.

Held:

No. The members of MEWA are entitled to the benefits although in the form of benefits which is a subject
of the negotiation of CBA. As a rule, a bonus is not a demandable and enforceable obligation; it may
nevertheless be granted on equitable consideration as when the giving of such bonus has been the
company’s long and regular practice. To be considered a “regular practice,” the giving of the bonus should
have been done over a long period of time and must be shown to have been consistent and deliberate.
The ruling in National Sugar Refineries Corporation vs. NLRC: “The test or rationale of this rule on long
practice requires an indubitable showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law requiring payment thereof.”
In this case, the record shows the MERALCO, aside from complying with the regular 13th month bonus,
has further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988.
While the special bonuses differed in amount and bore different titles, it cannot be denied that these
were given voluntarily and continuously on or about Christmas time.
The considerable length of time MERALCO has been giving the special grants to its employees indicates a
unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not
required by law. Indeed, a company practice favorable to the employees has been established and the
payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees.
Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would
amount to a diminution of the employee’s existing benefits.